The document summarizes trends expected in 2015 for the consumer goods sector, including packaged foods, beverages, tobacco, and alcoholic beverages. Some key points are:
1) North American packaged food sales are expected to rise only 1% annually through 2019 due to weak population growth and price increases taken by producers to offset commodity inflation.
2) Global beverage sales may increase 2-3% annually through 2018, led by growing demand in Asia-Pacific for beer and spirits, while carbonated beverages see weaker growth.
3) Tobacco sales, led by cigarettes, are projected to grow 6% annually through 2018, aided by rising consumer confidence in high-smoking regions like Europe and Indonesia.
5. North American Outlook Weak With More Innovation Needed
North American packaged food sales may rise about 1% annually
through 2019, according to Euromonitor data. Snack bars and
chocolate candy touting convenience and natural ingredients may
lead the group with 2% to 4% growth yearly.
Such gains may mitigate declines for gum (down 2%), which is
losing flavor with young adults due to artificial ingredients, and
pasta (down 0.5%). Product innovation highlighting protein and
simple ingredients remains high.
6.
7. Food Spending May Stay Stagnant Even as U.S.Confidence Improves
U.S. packaged food spending may not benefit from a further
strengthening in consumer confidence, based on little spending
growth since 2010 amid a general increase in confidence.
Weak population growth -- projected to rise less than 1% in 2015 --
and recent packaged food price increases taken by producers to
mitigate commodity inflation, are potential spending roadblocks.
8.
9. U.S. Food Maker’s Sales at Risk From Slow Economies Abroad
Many U.S.- based multinational packaged-food companies such
as General Mills and Kellogg have cited softening macroeconomic
conditions in the Asia-Pacific region, Europe and Latin America as
factors for weak operating performance in those markets.
GDP growth in Europe, Brazil and China has slowed since 2011,
with consensus estimates calling for a weaker performance in
2015. This could potentially affect future profitability for food
manufacturers.
10.
11. Improving U.S.Unemployment Rate May Stimulate Higher Food Sales
Improvements in labor markets such as the U.S. may support
consumers’ disposable-income growth, boosting North American
packaged food sales. Better economic conditions may help
premium-priced branded good sales the most, given their higher
price elasticity than generic brands.
The U.S. unemployment rate has declined steadily from its peak in
October 2009, yet still remains above pre-recession levels.
15. Global Beverage Sales May Increase 2% to 3% Annually to 2018
Slow sales growth is projected through 2018 for the largest
beverage categories, according to Euromonitor data. Beer, the
largest segment, may generate 2.6% compound annual sales
growth during the period vs. 1.3% during the past 10 years,
supported by growing demand among Asia-Pacific consumers.
Spirits may grow by 2.9% annually, and wine by 2.6%. Carbonates
may advance by only 1.2%, reflecting weak performance in mature
North American and Europe markets.
16.
17. Beverage Margins May Be Bolstered by Manageable Costs: Bull Case
Key beverage costs may be stable going into 2015. Corn and
related sweetener prices have eased since 2012 due to favorable
global corn supply conditions, and orange juice futures prices
have declined since mid-2014 on slack consumer demand.
Elevated prices for milk and producers may offset some of those
benefits to producers. In a Bull Case, stable input prices may
support producer margins. PepsiCo estimates low-single-digit cost
increases in 2014.
18.
19. Beverage Spending May Stay Flat Even Amid Higher U.S.Confidence
Spending on U.S. non-alcoholic beverages may not benefit from
a further strengthening in consumer confidence. Non-alcoholic
beverage spending has changed little since the end of the last
recession, while consumer confidence has almost doubled.
Slow population growth, projected to rise less than 1% in 2015, and
tepid consumer demand for sugary drinks may depress sales of
carbonated beverages.
20.
21. Wine Sales Outpace Beer and Spirits to Spur Home Alcohol Sales
Steadily rising spending on alcoholic beverages for home
consumption may support industry sales growth for the near term.
U.S. spending on alcoholic beverages for at-home consumption in
the third quarter rose 0.7% to $123 billion from a year earlier, which
followed a 3.1% gain in the second quarter – its largest increase in
six quarters.
Spending in establishments outside the home advanced 5% in the
third quarter, led by wine, which outpaced growth of both beer
and spirits.
25. Still Hot: Tobacco Sales Led by Cigarettes May Grow 6% a Year
Global tobacco sales may increase 6.4% annually through 2018,
according to Euromonitor data. Cigarettes, which account for
more than 90% of tobacco industry sales, are expected to outpace
the rest of the industry with 6.6% annual growth.
Tobacco sales in the Asia-Pacific region could increase the fastest
(13%), followed by eastern Europe (4.3%). The Pan-Europe region
has a smoking rate of about 30%, the highest in the world.
26.
27. High-Smoking Regions’ Rising Consumer Confidence Aids Tobacco
Rising consumer confidence in high-smoking regions may
aid tobacco sales in the near term. Consumer confidence has
rebounded significantly in the European Union since early 2013
amid improving macroeconomic conditions.
In Indonesia, where 36% of the 253 million residents smoke,
confidence has risen steadily in recent years. Philip Morris is the
market leader in the Pan-Europe region and second to China
National Tobacco in the Asia-Pacific region.
28.
29. E-Cigarette Vaporizer Sales May Rise Eight-Fold to $39 Billion
The size of the global retail e-cigarette and personal vaporizer
market is projected to soar more than eight-fold to $39.2 billion
in 2018, up from $4.8 billion in 2013, according to e-cig producer
Kimree and research firm Frost & Sullivan.
Industry growth will be driven by increasing consumer product
acceptance, the entry of tobacco companies with significant
financial resources for marketing, and ongoing electronic cigarette
product innovation, they say.
30.
31. Tobacco Spending Drops on U.S.Awareness of Risks,Price Hikes
Price hikes, increased awareness of the health risks of cigarette
smoking and the growing popularity of competing e-cigarettes
and vaporizers may be collectively depressing demand for
conventional tobacco cigarettes in the U.S.
Improving consumer confidence and disposable income haven’t
been enough to spark increases in tobacco spending. U.S.
spending has declined steadily in 2014, by about 3.8% to $84
billion through Oct. 31.
32.
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